Australian Property

Viewing posts in the Australian Property category

Uren: Throw FHBs to foreign wolves

snarling-wolf By Leith van Onselen The Australian's David Uren has produced a half-baked defence of foreign investment into pre-existing dwellings, arguing that concerns about foreign investment are a fallacy and that there is "little economic justification" for tightening enforcement of the foreign ownership rules. Let's examine Uren's arguments. If I am selling a house, and a Chinese buyer wants to pay more than an Australian, I make a larger capital gain and can use the additional proceeds to buy the house of my dreams — possibly a new one — or add more to my superannuation, or spend it on consumption,...
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Gittins: Australian house prices are different

economists-carmen-reinhardt-and-ken-rogoff-explain-why-growth-wont-cure-debt By Leith van Onselen Fairfax's Ross Gittins has produced a thinly veiled defence of Australia's exorbitant housing costs, arguing that housing values are inflated "because Australians have an unusual relationship with their homes". In making his case, Gittins draws on a recent research report from Saul Eslake, which provided six reasons for Australia's expensive housing. Much of the explanation comes from the insights of economic geography, the study of how we're affected by the spatial dimension of the economy and, in particular, of the way big cities work... Almost 60 per cent of Australians...
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Foreigners guzzle Melbourne apartments

images By Leith van Onselen The AFR has produced an interesting report today on a 92-storey apartment development by Malaysian developer, UEM Sunrise, which reportedly has all but sold out after just two weeks, with three-quarters of the apartments selling to foreign buyers: With 941 apartments, the 92-storey Aurora is the first project in Australia by the developer... The developer has sold down 895 units already, mostly through its strong networks in south-east Asia and China, local buyers will account for 25 per cent of the stock. Around 60 per cent of buyers are investors... UEM Sunrise plans to...
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Sydney brick-maker says “It’s all in the land”

ScreenHunter_5164 Nov. 26 11.04 By David Collyer, cross-posted from Prosper Australia The AFR today reports Brickworks Ltd calling for steep increases in Sydney land supply to assist affordability for homemakers. Developers on the outskirts of all the major Australian cities are dribbling out lots piecemeal – stifling supply, household formation and economic activity. It is entirely rational for them to seek to maximise their profits in this way, but I see no reason why state governments should aid and abet this private capture of the future earnings of citizens through staggeringly high land prices. From The AFR: The...
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Will the iron ore crash destroy house prices?

19g0dseuuoeyxjpg Back in 2010 when MB was just taking shape, one of the very few sell side analysts to get the iron ore price right in advance, Tim Toohey of Goldman Sachs, wrote an equally excellent piece on what the great iron ore correction of 2014 would do to house prices. Here is some of it: On whether Australian house prices constitute a speculative bubble: No  • We think that the behaviour of house prices over the past year, and indeed the past decade does not resemble a speculative bubble. Our rationale is that: i) Refinancing of established homes is at a 9-year low. ii) The turnover of home sales that...
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Risk on, as interest only mortgages hit record

ScreenHunter_12 Sep. 23 12.54 By Leith van Onselen APRA just released their quarterly data on housing exposures, which captures Authorised Deposit-Taking Institutions (ADIs) loans to the housing sector for the September quarter of 2014. According to APRA, ADIs’ total domestic housing loans were $1.3 trillion, an increase of $103.4 billion (9.0%) over the year to September, with the value of interest only loans growing by 14%. There were also 5.2 million housing loans outstanding with an average balance of $239,000. Of mortgages issued in the September quarter, 42.5% were interest-only loans. Moreover, over the year to...
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HIA sees record new home construction

ScreenHunter_01 Mar. 03 22.48 By Leith van Onselen The Housing Industry Association (HIA) has released a new report forecasting a record level of new home construction across Australia in 2014, and elevated construction levels to 2016: “In aggregate, we will commence nearly 190,000 new dwellings in 2014, surpassing the previous record of 187,000 back in 1994.” “The momentum culminating in this milestone has provided a substantial boost to Australia’s economy at a crucial juncture in the cycle. Below trend economic growth and weak labour market outcomes would be considerably worse without the reach a new home...
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Hammer to fall on dodgy Chinese property money

ScreenHunter_5115 Nov. 24 09.52 By Leith van Onselen Details about the parliamentary inquiry's report into foreign investment in Australian property, which is scheduled for release this Thursday, are becoming clearer, with information leaks pointing to the implementation of a new $1,500 application fee on foreign property purchases, as well as an overhaul of the existing monitoring and compliance regime. As reported yesterday in the Daily Telegraph, the proposed new $1,500 application fee would raise some $600 million over the next decade, which would be used to beef-up monitoring and compliance activities by the Foreign...
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Aussie banks ill-prepared for property crash

ScreenHunter_5114 Nov. 24 09.00 By Leith van Onselen Australia's big four banks are ill-prepared for a housing crisis, according to AMP Capital's head of credit markets, Jeff Brunton, who claims that official stress tests failed to account for the impact on mortgages that did not default. He takes up the argument pioneered at MB by Deep T, from The Canberra Times: "The banks will have enough capital to deal with the mortgages and the corporate borrowers who default, but they will then be left with a financial system that has got a high loan-to-value, with many Australians in negative equity positions"... "The standard stress...
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NSW surges to top of land cost leaderboard

ScreenHunter_18 Jul. 05 10.22 By Leith van Onselen Earlier this month, the Australian Bureau of Statistics (ABS) released its 2013-14 Australian System of National Accounts (ASNA) data release, which provided a detailed presentation of annual national accounts data. Locked away on Table 61 was my favourite section of the release: data on aggregate land values at the state and national levels. This years release confirmed that, at a national level, the land values underpinning the Australian house prices surged, with all states and territories recording growth in nominal terms, but with New South Wales and Victoria leading...
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Auction clearances slip on high volumes

ScreenHunter_19 Mar. 13 13.12 The national auction clearance rate slipped over the weekend on the back of falls in Sydney and Melbourne. According to RP Data, the national weighted average preliminary auction clearance rate was 67.7% over the weekend, which was down 1.3% from the 69.0% preliminary clearance rate reported last weekend. Sydney’s clearance rate fell by 0.9% to 74.3%, whereas Melbourne’s fell to 64.9% (last weekend 66.7%). Brisbane, which typically only has a small number of auctions, experienced a big jump in its clearance rate (up 6.9% to 52.2%). Overall auction volumes (3,294) were up slightly on last...
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RP Data weekend property market update

ScreenHunter_18 Mar. 18 17.58 Click to view RP Data’s latest weekly housing market update, which provides a useful snapshot of the housing market as at 23 November 2014. This week’s report includes: Latest weekly dwelling value results; Auction results & clearance rates; Latest median house & unit prices; Average time on market & vendor discounts; Mortgage market activity; and New listings...
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RP Data weekly Australian house price update

ScreenHunter_07 Mar. 20 20.55 By Leith van Onselen In the week ended 20 November 2014, the RP Data-Rismark 5-city daily dwelling price index, which covers the five major capital city markets, fell by 0.24%.  It was the first decline in nine weeks (see next chart). Home prices fell in three major capitals and rose in two (see next chart). Since the start of the year, home values nationally have risen by 7.43%, with all major capitals except Perth rising in value (see next chart). Over the past 12 months, home values have risen by 8.79% at the 5-city level, led by Sydney and Melbourne (see next...
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Why house prices are rising more than credit

ScreenHunter_02 Apr. 09 08.45 By Leith van Onselen Just over a year ago, Victoria's Department of Sustainability and Environment (DSE) was closed and amalgamated into other departments, and with it I thought its excellent data on the number of housing transfers and mortgage lodgements/discharges had been lost. Searching the Victorian Government's database last night, I stumbled upon this same data on the Department of Transport, Planning and Local Infrastructure (DTPLI) website, which shows a massive surge in the number of mortgages and transfers over the past year 18 months (see below charts). As you can see...
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China’s great Australian land grab

ScreenHunter_5081 Nov. 20 11.19 By Leith van Onselen As part of the Australia-China Free Trade Agreement (FTA), concluded on Monday, the foreign investment limits on Australian commercial real estate will be increased from $54 million currently to $1.078 billion, effectively giving Chinese developers unfettered access to Australian land. While many argue that increased participation by Chinese property developers will boost Australian housing supply, thereby improving rental availability and housing affordability, some local developers have accused Chinese developers of land banking - paying over the odds for lots and sitting...
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ACT Government stops affordable land supply

ScreenHunter_5080 Nov. 20 10.36 By Leith van Onselen I have explained previously (here, here and here) how the ACT Government deliberately manipulates urban land supply in order to maintain exorbitant land/house prices. Despite having an abundance of developable land, the Government has for a long-time drip-fed supply to the market, maintaining an artificial land shortage (scarcity) and, in the process, forcing buyers to pay high prices. According to Australian Property Monitors, the median Canberra house cost a whopping $573,000 as at September 2014, with the median house rent a ludicrous $450 - ludicrous because the...
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Australian housing is not “fairly valued”

ScreenHunter_3949 Sep. 02 08.10 By Leith van Onselen Moody's Analytics (not to be confused with Moody's Investors Service, the credit ratings agency) released a new report in the past few days arguing that Australian housing is "fairly valued as the long-run drivers of house prices—rents, incomes and interest rates—are supportive of current prices". Let's take a look. Why is Sydney so expensive? First, house prices in Australia are high compared with the rest of the world’s because of the rela- tively strong economy, helped initially by the mining and commodity boom, although commodity prices have cooled in 2014; a tax...
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Saul Eslake’s colleague, Alex Joiner, sees housing rollover

zdgfwe The media is reporting that the following is from Saul Eslake but it was actually written by his colleague, Alex Joiner. It is republished with permission: In Focus: Property market at a cross roads The Australian public’s infatuation with property is well documented. Perhaps justifiably so given the wealth it has created over the past few decades. But challenging economic conditions in the coming year and then an inevitable future monetary policy tightening cycle seems to have the residential property market headed into uncharted territory. Further, despite interest rates likely staying...
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RP Data weekend property market update

ScreenHunter_18 Mar. 18 17.58 Click to view RP Data’s latest weekly housing market update, which provides a useful snapshot of the housing market as at 16 November 2014. This week’s report includes: Latest weekly dwelling value results; Auction results & clearance rates; Latest median house & unit prices; Average time on market & vendor discounts; Mortgage market activity; and New listings...
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Auction clearances bounce

ScreenHunter_19 Mar. 13 13.12 The national auction clearance rate bounced over the weekend on the back of big rises in Sydney and Melbourne. According to RP Data, the national weighted average preliminary auction clearance rate was 69.0% over the weekend, which was up 5.3% from the 63.7% preliminary clearance rate reported last weekend. Sydney’s clearance rate jumped by 6.2% to 75.2%, whereas Melbourne’s jumped to 66.7% (last weekend 63.8%). Brisbane, which typically only has a small number of auctions, experienced little change in its clearance rate (up 0.3% to 45.3%). However, overall auction volumes (3,210) were up...
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Thelma and Louise do Oz housing

ScreenHunter_5039 Nov. 14 15.03 From David Collyer at Prosper...
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Weekly RP Data Australian house price update

ScreenHunter_07 Mar. 20 20.55 By Leith van Onselen In the week ended 13 November 2014, the RP Data-Rismark 5-city daily dwelling price index, which covers the five major capital city markets, rose 0.03%.  It was the eighth consecutive weekly increase (see next chart). Home prices rose in all major capitals except Melbourne (see next chart). Since the start of the year, home values nationally have risen by 7.69%, with all major capitals except Perth rising in value (see next chart). Over the past 12 months, home values have risen by 9.04% at the 5-city level, led by Sydney and Melbourne (see next...
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Treasury probes illegal foreign property

chinese-corruption-200x200 By Leith van Onselen From The AFR today comes news that the Australian Treasury is investigating 33 cases of potential illegal purchases of pre-existing Australian homes by non-residents: The federal Treasury said it was investigating 33 potential breaches of the law involving established residential properties. A small number of these involved “very high-value established purchases”, Treasury said. “In most instances the investigation activity involves the need to establish the identity of the relevant investor and to assess their eligibility to own the property in question.” It is...
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Sydney property investor bubble enters Twilight Zone

imgres By Leith van Onselen The speculator frenzy that has engulfed Sydney’s housing market just won't quit, with yesterday's Lending Finance data for September, released by the ABS, once again smashing all records, with both the value and proportion of mortgages going to New South Wales investors surging to another all time high. As shown below, the value of investor loans in New South Wales (read Sydney) continues to rocket, with Victoria (read Melbourne) – the second hottest market – also experiencing strong growth: According to the ABS, investor finance commitments in New South Wales in...
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The Melbourne ghost city revealed

ScreenHunter_4940 Nov. 12 08.24 By Leith van Onselen Prosper Australia has released its annual speculative vacancies report, authored by Catherine Cashmore, which has revealed that parts of Melbourne's inner-city apartment complexes are becoming 'ghost towers', with large numbers of unused or barely used homes. The report is unique because it uses water use data from Melbourne's three main metropolitan water retailers to determine whether a home is being used, with very low recordings of water consumption data used as a proxy to determine vacant dwellings. Speculative Vacancies (SVs) are measured as properties with...
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